What does it mean when a worker experiences an increase in real wages?
A) The worker's purchasing power rises.
B) The worker's nominal wage declines.
C) The worker's after-tax nominal wage declines.
D) The worker's nominal wage rises.

Question

What does it mean when a worker experiences an increase in real wages?  
A) The worker's purchasing power rises. 
B) The worker's nominal wage declines. 
C) The worker's after-tax nominal wage declines. 
D) The worker's nominal wage rises.

Quizplus · Accepted Answer

An increase in real wages means the worker's income has increased in terms of the goods and services that income can buy, indicating a rise in purchasing power. This is not necessarily related to changes in nominal wages, taxes, or after-tax income.

What Does It Mean When a Worker Experiences an Increase